MBB - NIM, bad debt metrics improve significantly QoQ - Earnings Flash
  • 2024-07-30T00:00:00
  • Company Research

MBB released its consolidated results for H1 2024 with PBT of VND13.4tn (USD529mn; +5% YoY), completing 46% of our full-year forecast. This implies Q2 2024 PBT of VND7.6tn (+32% QoQ; +23% YoY). Overall, MBB’s results were broadly in line with our forecast with QoQ improvement in NIM, asset quality, and ongoing strong NOII. We see no major risk to our earnings forecast, pending a more extensive review. 

  • H1 2024 consolidated credit growth was 9.4%, which was derived from (1) loan growth of 10.3% and (2) a 4.0% decrease in MBB’s corporate bond balance vs Q4 2023. As of Q2 2024, corporate bonds accounted for 5.2% of MBB’s total credit exposure (vs 9.2% as of Q4 2022). Additionally, lending to real estate businesses accounted for 6.7% of MBB’s total loan book (vs 7.1% in 2023). 
  • H1 2024 customer deposits growth was 9.0%. Q2 2024 CASA ratio was 38.6% (+2.0 ppts QoQ; +1.6 ppts YoY), which is by far the highest level in our coverage. MBB currently serves 28 million customers (+40% vs end-2022) and it targets 30 million customers by the end of 2024. 
  • H1 2024 NIM of 4.17% (-118 bps YoY) was lower than our full-year forecast of 4.33%. However, Q2 2024 NIM improved significantly by 54 bps to 4.58% due to  (1) a 12-bp QoQ increase in the IEA yield and (2) a 46-bp QoQ decrease in funding costs. We attribute the improvement in the IEA yield to (1) easing NPL formation and supporting lending rates for customers, and (2) strong recovery from written-off bad debts. Additionally, MBB’s decrease in funding costs was mostly due to ongoing CASA improvement and rolling old customer deposits to lower yields.
  • H1 2024 NOII was VND6.6tn (+73% YoY), completing 61% of our full-year forecast and tracking well ahead of our expectation, supported by (1) strong fee income, (2) higher-than-expected gains from trading FX and investment securities, and (3) strong recovery from written-off bad debts (+67% YoY). 
  • In H1 2024, the consolidated CIR of 30.6% was higher than our full-year forecast of 29.5%. At MBB’s recent AGM, management targeted to control the CIR below 30%. 
  • Bad debt metrics improved significantly QoQ given the resolved NPL case of a big corporate client in June. The Q2 2024 NPL ratio and Group 2 loans levels were 1.64% (-85 bps QoQ; +19 bps YoY) and 1.84% (-46 bps QoQ; -176 bps YoY), respectively. 
  • H1 2024 provision expenses surged 54% YoY from a low base and tracked slightly ahead of our expectations. We note that MBB was one of the few banks that reported a YoY decrease in 2023 provision expenses. However, Q2 2024 provision expenses decreased 26% QoQ, which we believe was partly due to a provision reversal for the major CIC-related NPL case solved in June. Q2 2024 LLR was 101.7% (+ 21.7 ppts QoQ; -54.4 ppts YoY).

MBB’s consolidated H1 2024 results

VND bn 

 H1 2023 

 H1 2024 

 YoY 

 Q2 2023 

 Q2 2024 

 YoY 

 NII 

 19,709 

 19,593 

-0.6%

 9,481 

 10,531 

11.1%

 Non-interest income 

 3,782 

 6,553 

73.3%

 2,079 

 3,598 

73.0%

 OPEX 

 (7,703)

 (8,005)

3.9%

 (4,135)

 (4,491)

8.6%

 PPOP  

 15,787 

 18,141 

14.9%

 7,426 

 9,639 

29.8%

 Provision expenses 

 (3,052)

 (4,713)

54.4%

 (1,203)

 (2,006)

66.8%

 NPAT-MI     

 9,917 

 10,559 

6.5%

 4,893 

 6,027 

23.2%

 

 

 

 

 

 

 

 Loan growth** 

12.5%

10.3%

-2.2 ppts

7.6%

9.5%

1.9 ppts

 Deposit growth**  

7.2%

9.0%

1.8 ppts

5.1%

10.7%

5.6 ppts

 

 

 

 

 

 

 

 NIM 

5.35%

4.17%

-118 bps

5.04%

4.58%

-46 bps

 Interest-earning asset yield 

9.26%

7.23%

-203 bps

9.27%

7.38%

-189 bps

 Cost of funds 

4.61%

3.46%

-115 bps

4.85%

3.27%

-159 bps

 CASA ratio* 

37.1%

38.6%

1.6 ppts

37.1%

38.6%

1.6 ppts

 CASA ratio plus term deposits in FX    

38.3%

39.9%

1.6 ppts

38.3%

39.9%

1.6 ppts

 CIR 

32.8%

30.6%

-2.2 ppts

35.8%

31.8%

-4.0 ppts

 

 

 

 

 

 

 

 NPLs / Gross loans   

1.44%

1.64%

19 bps

1.44%

1.64%

19 bps

 Group 2 loans / Gross loans  

3.59%

1.84%

-176 bps

3.59%

1.84%

-176 bps

 Accrued interest / IEAs  

1.21%

0.87%

-34 bps

1.21%

0.87%

-34 bps

 Source: MBB, Vietcap — *CASA volume included demand deposits and margin deposits; ** Q2 2023 and Q2 2024 loan and deposit growth is QoQ growth; H1 2023 and H1 2024 loan and deposit growth is 6M growth.

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